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Gold/Mining/Energy : Talisman Energy Inc. (TLM) -- Ignore unavailable to you. Want to Upgrade?

To: Todd R. Levine who wrote (70)	11/2/2008 1:57:42 PM
From: Jim P.	Respond to of 82

Todd, The stock did not fully reflect the runup in oil to $140. I do not think any of the E&Ps did. Some of the valuation increase can be attributed to the long dated futures price of oil. This is a better way of valuing the company. TLM did not participate fully in the increase in the long dated price of oil. All the E&P companies dropped more than the price of oil and natural gas would imply they should have. My opinion would be that TLM could be back to the mid teens in the next 12 months. It would be more of a sure thing going out 2 years and looking out 3 or more years many of the exploration and production companies will be at much higher prices than today and IMO will exceed this years highs. Good luck with the short term horizon. You should do well. Jim

To: Todd R. Levine who wrote (70)	11/2/2008 9:33:49 PM
From: Jim P.	Respond to of 82

WSJ article, reason for buying oil stocks online.wsj.com NEW YORK -- While oil may be at its cheapest in months, prices deep in the future reveal a market with serious concerns about long-term supply. As evidence, analysts point to charts of crude oil futures. Oil for delivery years from now costs more than oil for imminent sale, and the difference has widened. While front-month crude is down 53% from its July peak, oil contracts for later delivery dates have fallen far less. For example, as recently as last summer, December 2008 and December 2013 crude-oil futures on the New York Mercantile Exchange cost the same. Now, the 2008 contract is $21.50 a barrel below 2013, an unprecedented discount. [Chart] Light, sweet crude for December 2008 delivery closed at $67.81 a barrel Friday, up $1.85, capping the biggest monthly decline ever, while December 2013 crude closed at $89.31, up $3.11. A pause in the march of world demand helped topple crude from record levels above $145 a barrel. But the current price weakness could set the stage for an explosive move higher when consumption takes off again. Analysts say the fall has been so steep it could diminish investment in new supplies that are only profitable in a high-price environment. "Low prices are bullish longer term, as they derail whole sets of high-cost projects, exacerbate decline rates and discourage alternatives," said Jan Stuart, an energy economist at UBS Securities LLC. ¶Some signs of slower supply investment are emerging. Marathon Oil Corp. last week said it expects capital spending to decline 15% in 2009. Russia's OAO Lukoil Holdings said next year's planned capital spending could fall if oil prices slide further. Suncor Energy Inc., the second-largest producer in western Canada's high-cost oil sands, has said it would delay a key project to turn tar-like bitumen into high-quality crude. "The decline in prices is having a greater supply-destruction impact than the rise in prices had in terms of demand destruction," said John Hummel, president of hedge fund firm AIS Group, which manages a $400 million fund invested in commodity and other futures. Industrialized countries are now daily consuming 1.9% less oil than they did a year ago, according to the International Energy Agency. If economic conditions worsen, oil use will be the poorer. But a year or more from now, big supply challenges look unavoidable. The IEA sees only about 660,000 new barrels a day coming from outside the Organization of Petroleum Exporting Countries in 2009, and anticipates declining production from the world's oil fields. Output from Russia, once a mainstay of supply growth, is expected to decline this year and next. "You've got guys taking a demand focus and being extremely bearish," said Harry Tchilinguirian, senior oil market analyst at BNP Paribas Commodity Derivatives. "But we're saying there are issues in supply that have not gone away." BNP projects crude averaging $85 a barrel in the first half of 2009, rising to $105 in the second half. OPEC last week chose to curtail production by 1.5 million barrels a day -- almost 5% of its September production -- amid the steep fall in prices and fears of a stockpile buildup. With world oil fields in decline, the market could quickly tighten in 2011 and 2012 and the "current bear cycle may prove relatively brief," said Lawrence Eagles, head of commodities research at J.P. Morgan Chase & Co., in a note. The discount for front-month crude oil also reflects ample supplies in the world's tankers, pipelines and storage facilities. Recent data from major oil-consuming nations confirm that. The U.S. Energy Information Administration's weekly estimates show domestic crude inventories comfortably within the average range, and the IEA reports stockpiles are sufficient to cover about 55 days of demand in industrialized countries, a relatively high amount. Write to Gregory Meyer at greg.meyer@dowjones.com